Euro at Risk as Rally Fails, Positioning Signal Turns More Bearish

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EURO, US DOLLAR, EUR/USD, TECHNICAL ANALYSIS – TALKING POINTS:

  • EUR/USD break larger fails as costs droop again into acquainted vary
  • Key counter-trend line underneath stress, break may even see check beneath 1.12
  • Retail positioning knowledge hints at stronger bearish bias now vs. final week

EUR/USD value motion appears to have advanced in sellers’ favor since final week’s explosive upward break failed to search out follow-through. The Euro has slumped again by the 1.1330-78 congestion space, touchdown it proper again into the uneven vary from which it appeared prepared to flee.

The upward-sloping assist line defining the bounds of the rise from November’s swing backside is again underneath stress. A every day shut beneath that barrier could set the stage for extension downward to problem the 1.1140-86 space as soon as once more. That is a area of significance relationship again to March-June 2020.

Reclaiming some sense of reduction is more likely to demand the Euro to re-establish a agency foothold above 1.1378. That would neutralize some near-term promoting stress and maybe pave the way in which for an additional run at key resistance clustered close to the 1.15 determine.

EUR/USD every day chart created withTradingView

Meanwhile, retail sentiment has additionally shifted in a extra bearish route. Positioning has transfer to a 63.1 p.c tilt to the lengthy aspect having been virtually evenly cut up simply days in the past. In truth, the net-long skew has elevated by an eye catching 22.3 p.c over the previous week.

This is often thought of as a contrarian indicator: a positioning pivot towards the lengthy aspect is seen as suggesting that costs could also be biased decrease. The skew continues to be comparatively modest at 1.7 longs for each quick, hinting that there stays room for a decline to proceed growing.

Euro at Risk as Rally Fails, Positioning Signal Turns More Bearish

EURO TRADING RESOURCES

— Written by Ilya Spivak, Head Strategist, APAC at DailyFX.com

To contact Ilya, use the feedback part beneath or @IlyaSpivak on Twitter

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